NEW DELHI/BENGALURU: A handful of domestic enterprise software companies including Druva Software and Manthan Software Services are exploring plans to list their shares on stock exchanges, signalling the rapid maturing of at least some sections of India’s startup industry.

Business process management company Newgen Software Technologies and consumer analytics firm Capillary Technologies are considering public market debuts in 18-24 months, according to multiple sources aware of the companies’ plans.

“We have received suggestions from a few US banks to publicly list Manthan on Nasdaq,” said Atul Jalan, chief executive of business intelligence venture Manthan.

“It has been an agenda on our board meeting discussions for a while now,” Jalan said. “The board and investors believe an IPO is a trajectory the company should take.”

While an initial public offering would present the companies’ venture capital backers an opportunity to sell their investments and exit, it would also put the firms under greater public scrutiny and pressure to show consistent growth in revenues and profits.

Enterprise software firms, unlike several larger and more popular consumer internet companies, are able to weigh public share listings as a viable option both because of their long focus on profitability and the buoyancy in domestic and global equity markets.

The venture capital investors have another potential exit option as well, having begun to see greater inbound strategic interest from global corporations, primarily from the US, for some of their portfolio companies.

“An IPO need not be the only exit. The interest from an acquisition standpoint, whether domestic or international, is also on the rise,” said Aneesh Reddy, chief executive of Capillary Technologies. “But I also think if you want to run acompany independently, over a period of time, you will need to go public and get an exit for investors.”

Reddy, however, said that Capillary was at least “two-three years away” from listing itself.

Druva’s Borate, while declining to provide details, said that considering the company’s growth it was ready for a public market debut. “We haven’t finalised a plan yet, but between choices of getting acquired or public listing, we choose going public,” Borate told ET.

The Sunnyvale-headquartered firm was valued at about $220 million in 2014 when it raised $25 million in series-D funding, according to market estimates. Druva on Wednesday raised $51million at an undisclosed valuation in series-E funding led by Sequoia Capital.

Newgen, according to the sources mentioned above, has held early discussions with merchant banks to gauge the markets in India and the United States.

‘HIGH INBOUND INTEREST’The company’s CEO Diwakar Nigam said uncertainties existed in both Indian and foreign equity markets. “While it may not be the right time to go (public) right now, six or nine months down the line would be an ideal time,” he said.

“For companies that are providing tech solutions to the domestic and US markets, it is a fantastic time to come through.”

Manthan’s investors include Norwest, Temasek, which is backed by the Singapore government, and Eight Roads Ventures, which was formerly known as Fidelity Growth Partners India.

“It is totally accurate to say that the level of inbound interest in higher-quality companies, whether through IPO or an M&A, is pretty high,” said Mohit Bhatnagar, managing director of Sequoia Capital.

Bhatnagar’s buoyancy is understandable, given that Sequoia scored an exit with fourfold returns from the $130-million acquisition of portfolio company Citrus Pay by Naspers-owned PayU this month. This was preceded by a partial exit from another portfolio company, Quick Heal Technologies, when it raised about Rs 450 crore in its IPO in February, making the marquee VC firm one of the most successful risk-capital investors operating in the country. Sequoia manages assets of about $3 billion in India.

“Is the market now more accepting? Yes it is, and that too without dropping quality, which is really important. Secondly, the quality of our founders, and the vision that they are painting, is world-class,” Bhatnagar said.

CHANCES OF DOMESTIC LISTING SLIMHowever, with many of India’s product tech startups catering to markets outside the country, the possibilities of them exploring domestic listing are rather slim. VC investors also point out that in spite of an active IPO market, retail investors are yet to truly understand the fundamental business models of these ventures.

“If you look at Nasdaq, the market is mature enough to analyse and factor the potential into the price. I think that kind of maturity still isn’t there in the Indian markets,” said Mohan Kumar, executive director at Norwest Venture Partners.

This year has been positive in terms of IPOs, especially for risk capital-backed companies. According to Venture Intelligence, about a dozen private equity and venture capital-backed companies have raised over $1.3 billion in IPOs between January and September so far. In the same year-ago period, a similar number of companies went public but raised about $621million from the market.

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